Good Evening: thanks
Today Indian indices fell by nearly 3.5% but what caused the fall?
Market doesn’t like uncertainty. Today indices fell with the current news of increasing Covid-19 cases and possibility of an impending lockdown. However, I personally don’t feel that going further market will fall dramatically based upon past experiences.
Here are some reasons why we think markets are not likely to go down further;
1. Markets normally donโt fall twice for same reasons.
2. Indian companies are now well aware of the effect and side-effect of lockdown. All are using new SOPs and taking necessary safety precautions. Plus there is vaccine that reduces fatality. So like scientists say, COVID will become part of life just like the other known viruses.
3. Government is also trying its best to break the chain as well as vaccinate the population.
4. So, at worst we might go down between 5-7% more. At best, this would become an interesting investment opportunity and we could soon turn around from this point.
Note:
1. Markets may fall sharply if there are some news of war or similar. Such geopolitical events cannot be ruled out.
2. Up to 10% fall in the market is a normal ongoing volatility and requires no serious action.
3. -10% to -20% is a market correction and a good buying opportunity which we will take advantage of. If you have surpluses it would be a good idea to deploy now.
4. Down between 20-30% is a bear market phase.
5. If markets go below 30%, itโs a crash and that will be a recession phase